Offshore Drilling

After several days of teasers, I was anxious to read today about the Obama Administration’s decision on offshore oil/gas drilling.  With the huge oil discoveries that have been made off the coast of Brazil and even in the Gulf of Mexico, I am hopeful that a loosening of offshore drilling policy might spur some increase in domestic oil production, and help the U.S. economy.  The announcement can be found at the White House.  While I think the move is a good step, it leaves some things to be desired. For one thing, there is only a small areas that is being opened up to drilling. California and several oil-rich sections of the Alaskan coasts as well as the Northeast coast will remain off-limits.   So the good news is that folks can drill outside of Virginia and Southern states, and in the eastern  Gulf of Mexico.  Of course, drilling in the Gulf of Mexico is nothing new.  The Wall Street Journal reported today that the new areas “may hold between 39 billion and 63 billion barrels of recoverable oil and 168 trillion to 294 trillion cubic feet of recoverable natural gas.”  The U.S. typically consumes around 20 million barrels of oil a day and about 23 trillion cubic feet of natural gas.  This is only a good first step.  It will take years for some of the leases to actually take effect. And some areas may not come online until 2017.   I’d like to see a more aggressive push towards offshore drilling.  I know lots of critics will assert that we’re relying on dirty energy and drilling for more oil puts the oceans and environment at risk.  We can’t jump to renewables overnight.  While the nation is on the path to sourcing more of energy consumption to renewables, the domestic sources of oil and gas can spur financial capital for additional R&D into renewable energy, as well as help reduce the price of energy, and thus provide a little relief to the economy.

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2 Comments

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2 responses to “Offshore Drilling

  1. gatorgreg

    Have you read anything that would indicate the presence of hydrocarbons off the Atlantic seaboard? I am sure the eastern half of the Gulf will have some oil but I question the usefulness of the eastern seaboard. California has plenty of potential. Alaska is the easiest and one that is the most disappointing in my opinion. The oil companies already know quite a bit about Alaska and they could probably get first oil much faster there than they could in the eastern Gulf or the Atlantic.

    I am not certain this is anything but posturing. We shall see if drilling actually occurs.

  2. laowens87

    The blog posted above focuses on the implications of expanding offshore drilling, but what motivated President Obama’s public announcement? On April 2, 2010, the article “Obama’s Offshore Drilling Pitch Sways Few Fence-Sitters on Climate Bill” by Mike Soraghan was published in the New York Times. In the article, Soraghan briefly discussed the responses of the petroleum industry and environment groups to President Obama’s recent announcement regarding offshore drilling plans. Lifting the ban on offshore drilling off the East Coast, Gulf Coast, and Northern Coast of Alaska could potentially reduce America’s dependence on foreign oil and create homeland job opportunities. However, was President Obama’s decision to open offshore drilling areas intended to decrease foreign oil dependence and improve the American economy or was it a political tactic to gain conservative support for a comprehensive climate bill?

    Some aspects of President Obama’s proposal to expand offshore drilling satisfied Republicans and Democrats, while some aspects upset Republicans and Democrats. According to Soraghan, “the Republicans who did praise his plan called it too little, too late” (Soraghan, 2010). The writer of the above blog claimed that some offshore leases “may not come online until 2017”! The writer of the above blog also mentioned that areas included in the offshore drilling plan lack the recoverable petroleum reserves that other areas off the coast of the United States possess like Alaska’s Bristol Bay. Democrats and environmental groups are, however, pleased with the decision to exclude Alaska’s Bristol Bay from the list of new regions open to petroleum exploration because Bristol Bay is the site of one of the world’s largest fisheries (Efstathiou & Chipman, 2010). Nevertheless, environmental groups have still voiced concern about the environmental impact of increasing offshore drilling off the coast of other parts of the United States.

    Will President Obama’s offshore drilling proposal help or hurt his efforts to pass a comprehensive climate bill? Soraghan points out that President Obama’s offshore drilling announcement will likely prompt a few “fence-sitters” (Soraghan, 2010) to back President Obama’s comprehensive climate bill. Personally, I agree with the main points presented in the article written by Mike Soraghan. Last week’s announcement by President Obama was most likely politically motivated, but the political move was not aggressive enough to gain widespread conservative support for a comprehensive climate bill. I feel that a comprehensive climate bill will hurt the petroleum industry more than the new offshore drilling opportunities will help the petroleum industry. President Obama will need to provide the petroleum industry with more incentive to obtain bipartisan support for a comprehensive climate bill. At the moment, it is highly probable that a comprehensive climate bill will be passed before the petroleum industry even gets access to some of the offshore leases.

    References:

    [1] Soraghan, M. (2010, April 2). Obama’s Offshore Drilling Pitch Sways Few Fence-Sitters on Climate Bill . The New York Times. Retrieved from http://www.nytimes.com/gwire/2010/04/02/
    02greenwire-obamas-offshore-drilling-pitch-sways-few-fence-21861.htm

    [2] Efstathiou, J., & Chipman, K. (2010, April 1). Obama Offshore Drilling Plan May Aid Democrats on Climate Bill. Bloomberg BusinessWeek. Retrieved from http://www.businessweek.com/news/2010-04-01/obama-offshore-drilling-plan-may-aid-democrats-on-climate-bill.html

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